UNITED NATIONS WILL REDUCE 1996-1997 BUDGET BY $250 MILLION UNDER-SECRETARY-GENERAL TELLS FIFTH COMMITTEE

2 April 1996

Press Release
GA/AB/3070

UNITED NATIONS WILL REDUCE 1996-1997 BUDGET BY $250 MILLION UNDER-SECRETARY-GENERAL TELLS FIFTH COMMITTEE

19960402 Says 800 Posts Will Be Eliminated through Early Retirement, Attrition; Committee Adopts Decisions on Funds for Haiti, Guatemala, if Missions Extended

The United Nations will reduce its 1996-1997 budget by some 10 per cent -- $250 million -- by eliminating 800 posts through early retirement, attrition, a freeze in recruitment and lay-offs, the Fifth Committee (Administrative and Budgetary) was told this afternoon by the Under-Secretary- General for Administration and Management, Joseph E. Connor.

Also this afternoon, the Committee adopted two decisions by which it would be authorized the Secretary-General to commit $2 million gross ($1.8 million net) for the International Civilian Mission to Haiti (MICIVIH) and $2.3 million monthly for the United Nations Human Rights Verification Mission in Guatemala (MINUGUA), should the General Assembly extend those missions.

Mr. Connor, presenting the Secretary-General's reports on the $154 million in reductions from the 1996-1997 budget mandated by the General Assembly and on the United Nations cash flow, said the Assembly's reductions had given the Secretariat a focus and a timetable to save the total $250 million.

Explaining the $250 million, he said it would consist of $98 million in reductions the Secretary-General had submitted in his initial budget, the $104 million demanded by the Assembly and another $50 million from General Service vacancy rate savings also demanded by the Assembly. He said reductions of $140 million had so far been identified, with the rest to be achieved by the end of 1997. The savings would be spread throughout the Organization.

Preliminary comments on his address were made by Costa Rica (on behalf of the "Group of 77" developing countries and China), India, Cuba, United States, Cote d'Ivoire, Canada, Uganda, Egypt, Morocco, Italy (on behalf of the European Union), Republic of Korea and New Zealand.

As for the missions in Haiti and Guatemala, a decision adopted by the Committee would have the Assembly authorize $2 million gross ($1.8 million

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net) for the period 8 February to 31 May, should it adopt draft resolution A/50/L.67 and extend MICIVIH's mandate beyond 7 February. The other would have the Assembly authorize up to $2.3 million monthly for MINUGUA, should it adopt draft resolution A/50/L.68 and extend the mission beyond 18 March.

Both texts ask the Secretary-General to submit to the Assembly, no later than 15 May, his proposals on how to absorb the costs of those missions in the 1996-1997 budget. The absorption would affect, among others, part II of the budget. [Part II deals with political affairs, peace-keeping and special missions and outer space affairs]. The Committee would revert to the issue of appropriations in May, in the light of his proposals. The decisions recall that the Assembly had already asked the Secretary-General to save $104 million from the budget.

The representatives of Guatemala and Haiti welcomed the consensus decisions. Guatemala's representative expressed the hope that the matter of financing the two operations would be resolved in May. Her Government and the commanders of the Unidad Revolucionaria Nacional Guatemalteca (URNG) had been negotiating earnestly. The representative of Haiti said that was due to such consensus decisions that "we have finally glimpsed the light at the end of the tunnel".

Speaking for the Group of 77 developing countries and China, the representative of Costa Rica said they had joined the consensus with some understandings. Budgetary procedures set out in relevant Assembly resolutions should continue to be applied and all mandated programmes should be implemented in full.

The Committee will meet again at 3 p.m. Thursday, 4 April -- the last day of the first part of its resumed session -- to take action on a number of draft proposals, including the financing of the peace-keeping operations in the former Yugoslavia.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to consider two reports of the Secretary-General, on reductions to the 1996-1997 budget and on the Organization's financial situation, and take action on the financing of the International Civilian Mission to Haiti (MICIVIH), the United Nations Human Rights Verification Mission in Guatemala (MINUGUA), and the International Criminal Tribunals for the Former Yugoslavia and for Rwanda. Under-Secretary-General for Administration and Management Joseph E. Connor is expected to present the Secretary-General's proposals for achieving mandated savings of $154 million in the 1996-1997 budget and on the financial situation.

In his report on improving the United Nations financial situation (document A/50/666/Add.4), Secretary-General Boutros Boutros-Ghali states that the Organization's position remains critical, with total unpaid assessments at perilously high levels. Although the "bleak picture" will be eased by significant contributions, it has not fundamentally changed. The Secretary- General states that "without a significantly greater commitment by Member States... our financial position remains extremely precarious. The situation remains grave and the time for finding a solution is running out".

At the end of 1995, unpaid assessments to the regular budget were $564 million, the report states. By 15 March, 41 Member States had fully paid their dues, compared to 29 in the comparable period last year. As of that date, the outstanding contributions to the regular budget were $1.22 billion, of which $698.9 million, or 57.1 per cent, was owed by the largest contributor. Total outstanding assessments for peace-keeping then was $1.89 billion. The State with the largest assessment owed $900.9 million, or 47.7 per cent. Unpaid dues for the International Criminal Tribunals for Rwanda and the Former Yugoslavia totalled $9.6 million as of 15 March.

Regarding the cash-flow situation, the Secretary-General states that cash balances for the combined General Fund (the regular budget, the Working Capital Fund and the Special Account) were at an unprecedented negative level of $198 million at the end of 1995. For 1996, cash-flow projections indicate that the regular budget's cash position should remain positive through June. Thereafter, it would become negative and, by the end of the year, the negative balance would be $424 million.

For the peace-keeping accounts, the Secretary-General states that some $50 million will be paid to troop-contributing countries at the end of next month. Subsequently, slightly more than $1.1 billion will still be owed. Projections indicate that the cash position of peace-keeping will fall to $340 million by the end of 1996, barely enough to meet two months' needs. In that connection, the Secretary-General refers to the Russian Federation's

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intention to pay $400 million in 1996 for its regular budget and peace-keeping dues. The payment would affect the amounts to be reimbursed to Member States for troops and equipment during the year.

In his interim report on measures to save $154 million from the 1996- 1997 budget (document A/C.5/50/57), the Secretary-General states that an overall cut of some $140 million, of the $154 million mandated by the General Assembly, seems feasible now. That is because of the shortness of time between the Assembly's decision and the deadline it set for the report's submission. The cuts are couched in broad and preliminary terms and would affect staffing and work programmes and services. The amount could change as the budget's implementation proceeds, as managers respond to changing circumstances and as the results of ongoing reviews become known. At the end of the process, the level of mandated cuts seems achievable but with difficulty. Any new mandate adopted in the biennium would need new funding or would not be implementable without a commensurate cut elsewhere.

In reviewing the measures needed to achieve the $154 million cuts and cap spending at $2.61 billion, the Secretary-General recalls that he had proposed $98 million reductions when he presented the 1996-1997 budget last year. The vacating of a significant number of posts is required at the beginning of 1996 to attain the 6.4 per cent vacancy rate set by the Assembly for General Service posts. Otherwise, unbudgeted spending of up to $50 million could arise. It is clear that the mandated cuts could not be achieved while implementing the programme of work initially planned or without significantly cutting staff costs.

The Secretary-General anticipates that average biennial vacancy rates of 9.0 per cent for Professional and 7.0 per cent for General Service posts could be realized. They would be achieved through attrition, strict enforcement of retirement age, freeze in recruitment, early separation, lateral staff redeployment and lay-offs. Required lay-offs will be achieved through a mechanism that will ensure that affected staff are considered for available vacancies. Early separation for 1996 has been offered worldwide, with the expectation that voluntary buy-outs will significantly help achieve the reduction target. There is a role for Member States and host countries in helping terminated staff resolve visa difficulties, find other jobs and possibly to resettle. "The human dimension of this process deserves the most serious concern and attention", he writes.

The report contains a section-by-section review of the impact of budgetary reductions based on initial efficiency reviews by all Departments. Those sections achieving the highest savings include the Department of Administration and Management ($43.5-$48 million); regular programme of technical cooperation ($7.4 million); Department of Public Information (DPI) ($7.2-$8.0 million); United Nations Conference on Trade and Development

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(UNCTAD) ($6.6-$7.3 million); peace-keeping operations and special missions ($5.8-$6.4 million); Economic Commission for Latin America and the Caribbean (ECLAC) ($4.8-$5.4 million); and Economic Commission for Africa (ECA) ($4.3- 4.7 million).

Reductions in the Department of Administration and Management would affect support services, programme planning, human resource management, conference services and administration in Geneva and Vienna, the report states. Cuts in support services include partial or total deferral of upgrades in telecommunications systems.

In the area of conferences, the savings would reduce the capacity to service meetings; eliminate capacity for unscheduled meetings; reduce document-processing capacity and production of publications; cause delays in meeting records; and defer further technological advances in the document processing, particularly in the translation function. Such action is expected to ensure efficiencies in, among other areas: overtime costs related to weekend duty and night-shift schedules; the printing of and availability of documents; and in temporary assistance costs for language staff.

In the case of the DPI, the cuts would adversely affect the frequency of radio programmes and lead to a decline in press coverage, the promotion and marketing of videos and radio programmes as well as curtailment in Audio Bulletin Board services and distribution of news scripts and statements to radio producers. Further integration of information centres with the United Nations Development Programme (UNDP) would also be pursued.

Savings in the regular programme of technical cooperation would bring the level of resources for that programme to the level of expenditures for 1994-1995, as requested by the Assembly. The impact of cuts on UNCTAD would be assessed after changes in its work programme are determined at its ninth session later this month. The efficiencies expected in peace-keeping missions would include expanding the use of information technology; a more cost- effective system to transport personnel on field missions; and developing an integrated electronic network between field missions and Headquarters.

The reductions would make ECLAC defer 16 non-recurrent publications and two ad hoc expert groups. For the ECA, it would mean ending 25 reports and 18 publications; deferring nine publications and one expert group meeting; and cutting the meetings of nine ECA subsidiary bodies from eight to six days.

Preliminary cut estimates by budget section are as follows:

1. Overall policy-making: $1.2 million-$1.4 million 2. Political affairs: $3.1 million-$3.5 million 3. Peace/special missions: $5.8 million-$6.4 million

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4. Outer space affairs: $0.2 million-$0.3 million 5. Court of Justice: $0.9 million-$1.0 million 6. Legal activities: $1.6 million-$1.8 million 7A. Department of Policy Coordination and Sustainable Development: $2.3 million-$2.5 million 7B. Africa, critical economic situation: $0 8. Department for Economic and Social Information and Policy Analysis: $2.7 million-$2.9 million 9. Department for Development Support and Management Services: $0.5 million-$0.6 million 10A. UNCTAD: $6.6 million-$7.3 million 10B. International Trade Centre UNCTAD/GATT: $0.4 million 11. United Nations Environment Programme (UNEP): $0.5 million-$0.6 million 12. United Nations Centre for Human Settlements (Habitat): $0.6 million-$0.7 million 13. Crime control: $0.2 million-$0.3 million 14. International drug control: $0.9 million-$1.0 million 15. ECA: $4.3 million-$4.7 million 16. Economic and Social Commission for Asia and the Pacific (ESCAP): $3.6 million-$3.9 million 17. Economic Commission for Europe (ECE): $3.0 million-$3.6 million 18. Economic Commission for Latin America and the Caribbean (ECLAC): $4.8 million-$5.4 million 19. Economic and Social Commission for Western Asia (ESCWA): $2.O million-$2.2 million 20. Technical cooperation: $7.4 million 21. Human rights: $2.6 million-$2.9 million 22. Office of the United Nations High Commissioner for Refugees (UNHCR): $3.3 million-$3.6 million 23. United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA): $1.2 million-$1.3 million 24. Department of Humanitarian Affairs: $1.0 million-$1.1 million 25. DPI: $7.2 million-$8.0 million 26. Administration/management: $43.5 million-$48 million 27. Jointly funded activities: $0.2 million-$0.3 million 28. Special expenses: $0.1 million 29. Office of Internal Oversight Services: $0 30. Technological innovations: $0.6 million-$0.7 million 31. Constructions/maintenance: $2.0 million

Draft Decisions on MICIVIH and MINUGUA

A draft decision on the International Civilian Mission to Haiti (MICIVIH) (document A/C.5/50/L.33) would have the Fifth Committee inform the General Assembly that the Secretary-General would be authorized to commit $2 million gross ($1.8 million net) for the period 8 February to 31 May, should

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it adopt draft resolution A/50/L.67 and extend MICIVIH's mandate beyond 7 February.

By the terms of the draft decision on the United Nations Human Rights Verification Mission in Guatemala (MINUGUA) (document A/C.5/50/L.34), the Fifth Committee would inform the Assembly that the Secretary-General would be authorized to commit up to $2.3 million monthly, should it adopt draft resolution A/50/L.68 and extend MINUGUA's mandate beyond 18 March.

According to both texts, the Committee would ask the Secretary-General to submit to the Assembly, not later than 15 May, his proposals on how to absorb the missions' costs in the 1996-1997 budget. The absorption would affect, among others, part II of the budget. [Part II deals with political affairs, peace-keeping and special missions and outer space affairs].

The Committee would return to the issue of appropriations at its resumed session in May, in light of the Secretary-General's proposals. The drafts recall that the Assembly had already asked the Secretary-General to save $104 million from the budget and fully implement all mandated programmes and activities.

Action on Draft Decisions

AMMAR AMARI (Tunisia), introducing the two draft decisions, on MICIVIH and MINUGUA, said they had been the subject of intense negotiations in informal consultations. He now recommended their approval by the Committee. He pointed out that the date in paragraph four of the draft decision on MICIVIH should read 18 March, not 31 March.

The Committee then approved the draft decisions without a vote.

FABIOLA FUENTES ORELLANA (Guatemala) said she was grateful for the efforts and flexibility of all delegations, which facilitated the consensus decisions. She expressed the hope that the matter of financing the two operations would be resolved in May in the Committee's resumed session. The cooperation displayed by delegations was of crucial importance. In Guatemala, a will existed to reach agreement on the issues relevant to the concerned parties. Her Government and the commanders of the Unidad Revolucionaria Nacional Guatemalteca (URNG) had been earnest in their negotiations.

JOSEPH INNOCENT (Haiti) welcomed the consensus which led to the approval of the draft decisions. Haiti had always relied on the international community to assist it. It is a result of such consensus decisions that "we have finally glimpsed the light at the end of the tunnel".

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NAZARETH INCERA (Costa Rica), speaking for the "Group of 77" developing countries and China, said that the political positions of Group's members had already been put forward. On the budgetary side of the drafts, they had joined in the consensus bearing in mind some considerations. The first consideration was that budgetary procedures set out in General Assembly resolution 41/213 and other decisions should continue to apply. The Secretariat should not put forward proposals that would lead to the suspension of the programmes and all mandated programmes should be implemented in full. It should also be noted that final decisions on the budgetary allocations would be taken once the Secretary-General had submitted the report requested in the draft decisions just adopted.

Statement by Under-Secretary-General

JOSEPH E. CONNOR, Under-Secretary-General for Administration and Management, briefed the Committee on the report of the Secretary-General on the $154-million mandated budget cuts and the current financial situation. He said that the Integrated Management Information Service was now working fully. As for the financial situation, he said that it continued to be precarious. By 31 December 1995, only 94 Member States had paid up their regular budget dues, up from 75 at the end of 1994. The number making no contribution to the regular budget in 1995 was 22, down from 39, while those owing more than the current year's assessment rose from 71 at the end of 1994 to 74 in 1995. The lack of payment by the United States was very severe, but that country was not alone in owing dues. The United States rate of actual payment had dropped to below 50 per cent.

At the end of 1995, unpaid assessments to the regular budget had totalled $564 million, he continued. On 29 December, additional assessments of $1.14 billion had been issued for 1996. Twenty-five States had paid up their regular budget dues by 31 January, up from 19 on the same date in 1995. By 15 March, a further 16 States had paid up their regular budget assessments. Thus, by 15 March, 41 States had paid their assessment, compared to 29 in the comparable period in 1995. As of 15 March, payments and credits of $477.9 million had been received, leaving outstanding dues to the budget of $1.22 billion. Of that, $698.9 million, or 57.1 per cent, was related to what was owed by the State with the largest assessment.

At the end of 1995, unpaid dues for peace-keeping were $1.7 billion, he said. During 1996 additional assessments totalling $454 million had been issued by 15 March. After the application of payments and credits totalling $289.1 million, the total of outstanding assessments for peace-keeping as of 15 March was $1.89 billion, of which $152.0 million was related to assessments issued within the 30-day due period. Of the total, the State with the largest assessment owed $900.9 million, or 47.7 per cent.

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The Under-Secretary-General also proceeded to give the situation regarding the cash-flow situation, which were also described in the report of the Secretary-General on the financial situation. Cash flow projections show that the regular budget should remain positive through June. Thereafter, it would become negative and, by year-end, the negative balance would be $424 million. The Russian Federation had announced its intention to pay $400 million in 1996 for its regular budget and peace-keeping dues. Receiving such payments would have a positive effect on the amounts to be reimbursed to States for troops and equipment during the year.

Turning to the intended savings from the 1996-1997 budget, he said that the United Nations was doing more with less, like national governments. The total proposed cuts would total about $250 million, some 10 per cent of the biennial budget. What the Assembly had done last year in demanding cuts was to give a focus and a timetable for saving the $250 million. The Assembly had, at first, trimmed the Secretary-General's proposal by about $14 million. But in approving the budget last December, it had also asked for $154 million in savings through cuts of $104 million and vacancy rate savings of another $50 million.

He said the Secretary-General's paper had set forth how the Secretariat intended to meet the Assembly's target. About $140 million had so far been identified and the total sum would be met by the end of the biennium. That would be done through the use of larger vacancy rates, which would cut the number of personnel at the United Nations. Programme delivery and services would be maintained, mandated programmes implemented and efficiency gained. The paper showed the impacts the cuts would have on various departments. The savings had been spread throughout the Organization, causing deferrals and delays. Some 800 vacancies would exist in the biennium. They would be achieved through voluntary terminations, early retirements, attrition, freeze in hiring and other means, including lay-offs.

A complementary process consisted of efficiency reviews to improve the Organization's performance, efficiency and activities, he said. They were a part of the plans for a management reform by the Secretary-General and his overall management plan. The reviews were meant to achieve both better value and service by finding ways to achieve more or the same amount of output for less. More than 300 issues would be reviewed and concluded by 1 June to identify how much could be saved. Giving further details on the savings to be achieved from conference servicing, Mr. Connor said that, while some 7,000 meetings were scheduled at the United Nations, only about 80 per cent were actually held. Staffing would be kept at a level that anticipated a 10 per cent cancellation rate, for instance. Another set of reviews were looking at issues that were beyond departments, including such matters as travel.

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Task forces had been set up to look at those issues, he said. They included United Nations staff, officials and experts with experience on such matters. The individuals came from various countries at no cost to the Organization. In the near future, he would be able to tell the Committee that the cuts had been achieved. The Members would get what they had asked for and it would be done efficiently.

Discussion on Financial Situation

Ms. INCERA (Costa Rica), speaking on behalf of the Group of 77 and China, said she had some concerns about the proposed savings. Proposals on savings must be submitted to the Assembly for approval. The Group was disturbed by some problems that were arising as a result of the budgetary reductions, such as the costs for language courses and the loss of a number of posts.

VIJAY GOKHALE (India) asked for more information, either today or by Thursday, regarding reimbursement to troop-contributing countries and which month the Secretariat intended to release payments to those Member States. He asked specifically about reimbursement to his country for its participation in the United Nations Operation in Somalia (UNOSOM II). India had not received such payments since September 1994.

On the issue of the status of the assessments, he said the report had only made mention of Member States which had paid in-full. Citing the figures in the report, he said his Government had recently paid more than $2 million, leaving a far smaller amount of arrears outstanding. That contribution, and those of other Member States that had made substantial contributions but had not paid up in-full, should have been acknowledged in the report, so that the Assembly would have a better picture of the status of assessments.

FUMIAKI TOYA (Japan) welcomed the reductions identified so far. He had noted the number of measures that would be taken to achieve the vacancy rate for the General Service and Professional categories of staff. However, he was concerned that newspaper articles had more detailed information on issues related to separation of staff, which was not included in the report. He asked for a breakdown of the respective categories of staff. The recruitment of successful candidates from national examinations should be continued and that examination should be held in 1997, he added.

ANA SILVIA RODRIGUEZ ABASCAL (Cuba) supported what Costa Rica had said for the Group of 77 and China. She asked why a decision had been taken, regarding the Commission on Human Rights, that not all documents would be translated into all languages in order to save some money. She asked whether it was true that the Office of the Under-Secretary-General for Administration

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and Management had given the order to Geneva that some documents should not be translated to other languages.

VICTOR MARRERO (United States) said he would comment later in detail on the Secretary-General's report. Meanwhile, the United States was working actively to ensure that the situation was improved. He would take it that the report had been submitted to the Committee for information purposes only and asked whether that was how the Under-Secretary-General saw it.

MANLAN AHOUNOU (Côte d'Ivoire) said that the report had alerted him about the severity of the current financial crisis. He had reminded his authorities of the need to meet their obligations. Côte d'Ivoire had paid up its dues to both the regular and the peace-keeping budgets. However, it had not been mentioned among those who had paid up their dues. The report (document A/50/666/Add.4) should be corrected appropriately.

SAM HANSON (Canada) said he had noted that the document on the budget cuts (document A/C.5/50/57) had not been introduced formally today. He would therefore refrain from engaging in a formal debate until the appropriate time. As for the report on the cash-flow, it should be updated regularly.

NESTER JALOMAYO-ODAGA (Uganda) said "my headphone is also suffering from the financial crisis, so I didn't hear you well when you seemed to say Rwanda instead of Uganda", referring to the Chairman giving the floor to Rwanda. Uganda would reserve its comment until the formal introduction on the report on the budget cuts and after carefully studying it.

He said that the Secretariat should work with Member States and adhere to General Assembly resolutions on the United Nations budgetary procedures. He asked the Secretariat to tell the Committee how much it had expected to save by removing paper and pencils from conferences rooms and what had happened to the reserve stocks. More information should be provided on the posts in conference services, particularly those in the D-1 category and above.

MOHAMED FATTAH (Egypt) said he had the same concerns as expressed by Japan regarding newspaper articles. Member States should be informed about those issues before they reach the media. He awaited the response from his capital and the Advisory Committe on Adminstrative and Budgetary Questions' comments on the report on savings. The Assembly would decide on the areas in which the Organization should achieve savings.

ABDESALAM MEDINA (Morocco) referred to annexes two and three -- on outstanding contributions and status of contributions up to 15 March -- in the

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report on improving the Organization's financial situation. He asked if all the contributions received by 15 March had been included in those two annexes.

RENATA ARCHINI (Italy), speaking on behalf of the European Union, said the Union would study the report and make more specific comments at a later date.

SOONG CHUL SHIN (Republic of Korea) expressed the hope that the national competitive examinations would not be held captive by the savings proposed by the Secretary-General.

DENISE ALMAO (New Zealand) asked for the Fifth Committed to be given monthly reports on the cash-flow situation. She welcomed the fact that the Under-Secretary-General for Administration and Management had made preliminary comments on the report. Member States now had time to study it. She would comment on it at a later date.

Mr. CONNOR, Under-Secretary-General for Administration and Management, responding to some of the questions, said "we are currently in addendum 4 of the report. I hope we will not reach addendum 44." He said he would try to make frequent reports to the Committee. The report on Member States' payments was as of 15 March, which was why Côte d'Ivoire's payment after that date had not been included. That country would see its name in the next report. He had taken the initiative to brief all ambassadors on the report of the Secretary-General on the budget cuts and had tried to respond to the members of the Group of 77 developing countries. The modalities for paying the $50 million in peace-keeping reimbursements were being worked out. The payment would be made to those that had waited the longest and would also depend on the mission involved. National competitive examinations would not be abolished. They would be continued as a reliable way to get new recruits to the United Nations.

Mr. JALOMAYO-ODAGA (Uganda) supported Egypt's views that the Assembly should be informed on sensitive matters before the members of the media. The pencils and papers that had been carted away should be returned until the Assembly had decided on what savings to make. His delegation had had extreme difficulty in following the discussion during negotiations and amendments to draft resolutions, due to the absence of papers and pencils.

Ms. RODRIGUEZ ABASCAL (Cuba) asked when the Under-Secretary-General would answer her questions, as the Fifth Committee session would end on Thursday. Since the Commission on Human Rights would end its meeting soon, a late answer could be too late.

Mr. CONNOR said that he had not signed the order she had mentioned and would have to look into it.

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